Innovation and Impact: Enough Talk, More Do

If you’re a nonprofit news junkie, you know it’s nearly impossible to go a day without reading or hearing the words “innovation” and “impact.” Just check out the feeds of the nonprofit Twitteratti, where those complex concepts are distilled to 140 characters or less every day.

But for those of us who care about linking rigor to innovation and impact (especially impact assessment), making them more operational, and integrating them more systematically into nonprofit/philanthropic practice, it’s hard to find serious discussion that is more about practice and less about how savvy some of the folks who opine about these concepts want to appear.

Is innovation really innovative?

Innovation, for example, is hardly a new construct; but it would be easy to forget that, given the level of ink that’s been spilled about the need for it in the nonprofit sector. In fact, there have been a number of people in the nonprofit world who, for some time now, have advocated for the sector to embrace new approaches and shake things up periodically. And that’s exactly what’s happened in recent years—due, in some part, to the influx of people from other sectors who’ve brought a much-needed emphasis on results, management, and measurement to nonprofit/philanthropic institutions that, as recently as a decade ago, were somewhat skittish about these processes.

This group has also brought a new, decidedly businesslike vocabulary, at the center of which is “innovation.” Once primarily a buzzword in the private sector, innovation has now become the term du jour in the social sector.

So what’s wrong with that? Nothing, if innovation is used to connote something new. Lately, though, the concept has been bandied about with nary a thought as to whether what’s being described is indeed unique or whether it’s just old wine in new bottles. Of particular concern is the assumption among some who are new to nonprofits that any idea or approach they advance is a radical departure from what’s gone before.

In fact, a review of the steady stream of studies and reports issued under the guise of innovation reveals much that is merely a restatement or repackaging of ideas and concepts that have already been acknowledged or are being used by people who’ve been working in the nonprofit sector for awhile. As a colleague who works for a philanthropic evaluation company dryly noted, “They take what we already know and put a framework around it.” It’s akin to a bakeoff that allows a competitor to tweak a chocolate cake recipe and give it a new name. When all is said and done, it’s still essentially a chocolate cake.

Thus, the need for more collaboration and partnerships among the private, public, and nonprofit sectors—something that has been trumpeted for more than a decade—is now touted as “shared” or “collective impact.” Advocacy, long-practiced by smart nonprofits and funders, is now “key” to “leveraging impact.” Years of beseeching funders to understand the importance of investments in capacity building and growth/replication is now being echoed by a new crop of players calling for “growth capital” and “scaling.” Program-related investments (PRIs) and mission-related investments (MRIs), which have been around for a while, are now promoted as “essential” components to “impact investing.” The importance of marketing and communications—once seen as anathema to nonprofits but increasingly accepted as standard practice—is now reflected in admonitions to nonprofits to “brand” themselves. The need for nonprofits and foundations to measure results has been a mantra among strategic and serious field leaders for a decade, but today foundation executives new to philanthropy, who reiterate the desire for evaluation and metrics, are lauded as “transformative.”

But there’s more. Some of the same foundation folks who talk about innovation have also been proponents of “assessing impact”—a phrase that has become almost de facto in speeches or articles by philanthropy pundits calling for “more rigor” than has generally been demonstrated in traditional philanthropic circles. Foundations, for example, need to “leverage impact” through better strategy. Businesses can “achieve more impact” by incorporating social responsibility and moving toward a “double [triple] bottom line.” Nonprofit boards need to be more focused on making organizations more accountable so they can “have impact.” Advocacy “leverages impact.” Collaboration “enhances impact.” Cross-sector partnerships “lead to greater impact.”

Few would argue that all of the above aren’t important concepts, no matter how they’re phrased, and that there’s still a need for them to be more deeply embedded in nonprofit and philanthropic practice than they are. There’s also little doubt that reiterating them in different ways helps to reach broader and more diverse audiences about what works and what doesn’t.

What’s of concern to some, though, is the increasing number of reports or studies on so-called innovative ideas or models—or ways to assess impact—that have been generated by individuals who seem to have little or no concern about whether or not what they’re claiming as “the next best thing” is really just “been there, done that.” Of equal concern is that generous support for these kinds of efforts is sometimes being underwritten with foundation dollars—money that might be better used to help organizations implement purportedly innovative ideas rather than present them, again, albeit in snappier packages. (A particularly salient example of the trend of misapplying the notion of innovation is the Social Innovation Fund. Established to serve as an important new funding source for the sector, the Fund later came under criticism for supporting a number of well-established safe bets rather than what most thought of as true innovation.)

But what’s most disturbing to some nonprofit leaders are investments that have been made in so-called innovative initiatives that duplicate existing efforts with a proven track record of success documented through metrics, data, and analysis—all of which investors championing businesslike practices say that they want.

Recently, for example, a senior program officer from a national foundation met with a “social entrepreneur” whose pitch consisted of little more than paper napkin drawing—no business plan, no objectives, no market analysis, and no pilot. Despite knowledge of another highly successful organization with an almost identical mission and structure (and that was preparing to “scale” its substantive and effective infrastructure), the program officer decided to make a multi-million dollar investment in a wholly new endeavor that reinvented another wheel, based on the assumption that the new entrepreneur’s star credentials from another field would be enough to ensure its success. Nine months later, the entire project not only barely got off the ground, it imploded, leaving the investor scrambling to find a home for the remaining shell of the originally lauded “innovative” concept. Meanwhile, the “older” organization has continued to quietly prepare for an international launch that is expected to triple its reach—and with little foundation funding.

This is not to say there isn’t room for more competition in the nonprofit sector; there is, and there is nothing wrong with organizations having to prove their mettle in order to justify serious investments. What there isn’t room for in these times of ever-dwindling resources is getting caught up in the folly of believing that just because something is described as innovative, it is.

Where’s the “do”?

It’s little surprise, then, that collective eyes are beginning to roll when the terms innovation and impact are tossed around with little explication as to what they look like on the ground and within a more systematic framework. So, maybe it’s time to start putting our money where our mouths are and get serious about assessing what, exactly, is true innovation; and, most important, what are the kinds of innovation that lead to real impact—especially those that can be rigorously assessed and measured.

Auspiciously, some foundation and nonprofit leaders seem to be getting the message. According to a recent report by the Center on Effective Philanthropy, assessment has become a high priority for some foundation leaders, who see “progress as having been made on this topic during the past decade.” At the same time, though, most still think that too few foundations are able to measure their overall performance and, especially, impact in ways that would indicate “effectiveness.”

So, what can we do to tamp down the blather and ramp up the “do”?

We can start asking harder questions and pushing for more truthful answers from those preaching about the need for impact and innovation. One suggestion is asking these folks what exactly they are doing in this area, how they are doing it, and what they have discovered—good and bad. At a recent conference, for example, the president of one of the world’s largest foundations was asked what philanthropy needed to do to have more impact. His response: “Do more evaluation . . . develop feedback loops . . .have more staff meetings . . . work with private sector partners.” None of these are new concepts, but it’s as if linking them to impact makes them so. Yet some audience members acted as if they were hearing these bromides for the first time, judging by their eagerness to praise the speaker for his brilliance. No one asked him what his institution was actually doing to “assess impact,” nor, more importantly, what he’d learned as far as what worked and what did not.

We can start questioning evaluation results that were not generated by independent third-party evaluators charged with conducting stringent analyses and given carte blanche to publicly reveal the results—warts and all. As long as firms or organizations with ties to the investors funding evaluation studies receive contracts to conduct these assessments, the results will always be tainted with the perception of bias, no matter how hard the contractors try to maintain objectivity. And as long as investors place caveats on what is reported, we will never gain true understanding of what works and what doesn’t, and what impedes progress and, ironically, future innovation.

We can stop applauding articles that merely restate what we already know. Instead, we must push for more thoughtful, analytical, and serious treatments of how we can better measure impact and make decisions as to what is true innovation and what is not.

We must stop decoupling innovation and impact. Some have made the argument that truly innovative efforts start with big ideas, not small metrics, and, thus, shun attempts to track what they are doing. Without any sense of where innovation starts, how it progresses, and where it ends up, however, there will be little learning as to what was effective, what wasn’t, and why—leading to more uninformed investments and wasted time. A balance is required: funders who invest in innovation must recognize that asking for a full-blown evaluation will probably quell experimentation, but innovators should, at the very least, be able to provide evidence that their efforts are making a difference.

We can call it out when people confuse impact with outcomes or outputs. A well-known funder recently announced that s/he would no longer be supporting organizations that couldn’t demonstrate impact as a function of how many people receive a particular service they offer. Despite this funder’s confusion over the difference between impact and outputs, the announcement not only went unchallenged, it was trumpeted in articles as a “new approach to funding”—largely due to the donor’s reputation as a successful business mogul.

We must begin asking investors whether and to what extent they are incorporating more rigorous impact assessments more systematically and comprehensively into their own efforts. Specifically, we should be asking for at least one concrete example of how they (or others) have methodically assessed not only what grantees have done but also what the impact of both that investment and the grantees’ actions have been beyond the organizations themselves.

Indeed what better measure of impact is there than whether and to what extent an investment has had traction beyond a list of stipulated outputs or outcomes that the organization and/or investor wanted to see? That list could be expanded to include looking at whether and to what extent organizations supported by charitable donations are enhancing the ability of the communities they serve to address issues beyond what they were primarily funded for or within narrow programmatic outcomes. The measure becomes a community’s ability to resolve not just the issue at hand but also problems that may arise in the future—i.e., the program’s social efficacy.

Among funders interested in homelessness, for example, rather than just assessing how many homes have been built or how many loans have been provided or even how many homeless people are now off the street, assessment could include whether the organization was a factor in engaging the larger community around the issue and then addressing it. That would be a powerful measure of impact. Another would be assessing the passage of public policies affecting a broader population than that targeted by the initiative. Yet funders shy away from these activities as being “too complex” or “difficult to measure,” and/or view them as long-term processes whose results few will have the patience to wait around for.

We must begin questioning investors who claim to be “funding innovation” but who, on closer inspection, are really funding newer and splashier versions of projects or models that either have been tried previously (and failed) or already exist but quietly, without fanfare.

In short, those of us who say we care about rigorous impact evaluation as well as true innovation must stop shying away from digging deeper into claims that someone has discovered “the next big thing” or is “assessing impact” but that fail to elaborate on exactly how or what has been learned.

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Unlike other domains, the nonprofit sector continues to be skittish when it comes to honest public debate, as well as critical thinking, about ideas and approaches on which we may disagree. Critical thinking, however, is not the enemy of innovation; it’s often what spurs it. And impact assessment is far too important a practice to be given short shrift, given the serious challenges we face as a nation and globally. With that in mind, let’s look forward to less talk and more “do” around innovation and impact assessment.